The collapsing economics of solo legal practice

Benjamin Barton, a professor at the University of Tennessee Law School, has generously some shared tax data he’s collected on the earnings of lawyers in private practice. Prof. Barton’s new book, GLASS HALF FULL: THE DECLINE AND REBIRTH OF THE AMERICAN LEGAL PROFESSION will be published next month by Oxford University Press. Here’s OUP’s summary:

The hits keep coming for the American legal profession. Law schools are churning out too many graduates, depressing wages, and constricting the hiring market. Big Law firms are crumbling, as the relentless pursuit of profits corrodes their core business model. Modern technology can now handle routine legal tasks like drafting incorporation papers and wills, reducing the need to hire lawyers; tort reform and other regulations on litigation have had the same effect. As in all areas of today’s economy, there are some big winners; the rest struggle to find work, or decide to leave the field altogether, which leaves fewer options for consumers who cannot afford to pay for Big Law.

It would be easy to look at these enormous challenges and see only a bleak future, but Ben Barton instead sees cause for optimism. Taking the long view, from the legal Wild West of the mid-nineteenth century to the post-lawyer bubble society of the future, he offers a close analysis of the legal market to predict how lawyerly creativity and entrepreneurialism can save the profession. In every seemingly negative development, there is an upside. The trend towards depressed wages and computerized legal work is good for middle class consumers who have not been able to afford a lawyer for years. The surfeit of law school students will correct itself as the law becomes a less attractive and lucrative profession. As Big Law shrinks, so will the pernicious influence of billable hours, which incentivize lawyers to spend as long as possible on every task, rather than seeking efficiency and economy. Lawyers will devote their time to work that is much more challenging and meaningful. None of this will happen without serious upheaval, but all of it will ultimately restore the health of the faltering profession.

I hope to discuss Barton’s data and conclusions in more detail once I’ve had a chance to read the book. Here I’m going to focus on some striking numbers regarding the changing economics of solo legal practice.

Solo legal practice represents a particularly crucial aspect of the economics of the legal profession, because it’s by far the single most common job for lawyers to hold. 75% of all practicing lawyers are in private practice, and half of these people are solo practitioners (the other half is made up of partners and associates in law firms of all sizes, along with lawyers who work for businesses and other non-government entities). This means nearly two out of every five practicing lawyers are solos. (Given this, the fact that almost nobody in legal academia knows anything about solo practice would seem to be suboptimal, at least from the perspective of a professional training school).

Barton’s data reveal that the average (mean) compensation of solo practitioners has declined sharply over the past 25 years:

These numbers are particularly striking when juxtaposed with the change in average (mean) wages of American workers (Note that these figures are for all employees, including part-time workers. They include employer contributions to employee pension plans). This graph represents the percentage relationship between average solo practitioner earnings and the average wages of all American workers:

Note that these are mean, not median, earnings. Median wages for all US workers (full-time and part-time) in 2013 were about $28,000, and I would expect a similar percentage discount between mean and median solo practitioner earnings, since the most successful solos are among the very highest earning lawyers. This suggests the median solo practitioner is making less than $35,000 per year. Which, given what has happened to the cost of law school over the past 25 years, is another problem:

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Tangentially related – I got through three years of law school and received not one second of education about how to run a small business. To my knowledge there wasn’t even such a class offered. Given how many of us end up in solo practices and small partnerships, you would think it would be mandatory.

Then again, I received the same zero advice studying engineering, I know architecture students receive none, and I’m pretty sure there’s not much offered in medical school.

There’s a tension between the trade-oriented aspects of professional education and the higher-minded aspects that needs to be resolved without turning it all into vocational training. I have no answers and I read Paul’s posts in the hopes that he might have some.

BoredJD

It can be done within the current system just by converting some of the current options into different options that align more with what graduates will actually be doing.

There is, I think, a point at which the classes stray too far away from legal practice to be worthwhile. You don’t need several dozen courses on various facets of international law or sports law or “constitutional law.” One of those can be a solo practice incubator of some sort. Of course you shouldn’t get rid of international law entirely, but this type of stuff needs to be demphasized in the curriculum.

Lamont Cranston

I had a class in copyright and a separate class in intellectual property more generally. I also had admin law and environmental law. And of course, “law and literature.” I’m not opposed to the school offering all of those classes, but a class on running a small business would have been far more useful to most of the students.

I’d argue for a class in “what you will actually do in practice” as well as one about running a business. I don’t know how closely law school resembles legal practice, but engineers and architects spend their first year trying to figure out how to use their academic knowledge with regard to the actual tasks they are given. It can be an ugly process.

Lamont Cranston

Part of the problem is special snowflake syndrome. Many, many law students think they will actually have a chance at practicing some esoteric area of the law, so they take classes in subjects that they will never encounter in practice (you’ll notice I took not one but two IP classes).

My understanding is that law schools are offering more classes aimed at practical legal skills these days, but I suspect they still have a long way to go.

CSI

And having these practical small business courses might break the illusion that all their students are going to big law or international law or something similar.

In our computer science program, we don’t do enough, but 1) we try to get industry people in to give guest lectures or run workshops and 2) we have an industrial experience program that puts people into paid, partially supervised internships for a year.

I’m right now revising part of the MSc Software Engineering course to be closer to a practicum.

It’s very challenging! Even doing obvious stuff and connecting to practice doesn’t typically have the effect that experience does.

Philip

My undergrad program had a year-long senior capstone project instead of a senior thesis, in which teams of 4-5 students work on a project for a company, national lab, etc (whoever will pay the school and can put together something that sounds worthwhile, basically). All CS and engineering majors do it, and some math, chem, and physics majors do as well. The execution isn’t always great, but I think it’s often a pretty useful experience.

Mine switched to having team senior projects after I left, but I had done an independent study that was effectively a capstone. IMO, it’s not close enough to actual project work to be meaningful unless it’s run the way you describe, with involvement by an outside “client.” And the program you describe is the first I’ve heard of like that.

The engineering department started running it something like 50 years ago, so there’s been some time to work out the kinks.

DonN

This is 30+ years ago – when I got my CompSci degree we had to do a two semester project with a group that was pretty significant. Working on a such a project with a handful of teammates was an amazing help in the start of my career.
DN

At least at Northeastern Law, co-ops were a very mixed bag. Some are admittedly amazing and lead to flush rolodexes and job offers, but many, probably most, are just looking for cheap/free clerical labor. A proper co-op program needs a lot of administrative oversight to prevent employer abuses, which Northeastern never gave two sh*ts about. In talking with other alumni, it would appear that the school also inflated/fudged/lied about the percentage of students who landed jobs with a co-op employer for several years; perhaps even a decade or more. Back in 2012, they were claiming that 48% of students got a full-time legal job from a co-op employer while their ABA report showed that only 43% of the class landed those jobs, whether from co-op or not.

Yes, the idea that the placement is both a job (thus appropriately paid) and educational (thus requires investment and has different expectations) makes it challenging. Thus the hope we can do something inside the structure of our program. But then realism becomes a significant challenge.

BoredJD

They don’t need to be mutually inclusive- the class be a year long and cover both business and legal aspects of running a solo practice including “unsexy” areas of the law that every solo will need to have a passing familiarity with. The problem is that those areas just aren’t the interesting to most law professors.

None offered in medical school, apart from “find an office manager you can trust”.

Comparing legal and medical education is probably missing the point, but it’s worth noting that the number of physicians in private practice decreases each year, and being an employee doc is viewed as desirable by large numbers of new grads. What would the attorney version of Kaiser Permanente be? Could there be such a thing as a legal-advice HMO?

Maybe, but I’m arguing that there’s a general problem with the way professional education works. Paul has been highlighting one horrible aspect after another of legal education, but that’s not the only profession with this kind of problem, just (maybe) the one with the most extreme numbers.

DocAmazing

Didn’t mean you, Papa Bear, but rather my own train of thought. Obviously, there are significant similarities in the ways in which architects, engineers, physicians and attorneys are hired/employed/make a living, but I wonder if the differences are so great that models used for one group are inapplicable to another. Most people’s relationship to healthcare is usually more one-on-one and obvious than their relationship to their built environment (for example); does that render the idea of universal housing and structure provision less likely than that of universal healthcare?

I understood your comment and I was trying to respond to it but wasn’t clear enough. Of course there are differences in how we practice* but all the professions we’re talking about have the possibility of solo or small-firm practice. That possibility is held out in a lot of places as one of the reasons to go into one of these professions.

Even where the differences are greatest I think there’s some similarity. For example, my g.p. gets most of his payments from insurance companies and has a large staff to deal with the huge amount of bureaucratic bullshit that entails. My firm gets 95% of our payments from other small companies (owners and architects). You know what we have in common? Cash-flow difficulties from late payment and assholes who want to nit-pick not just because they can but because they think they’ll “win back” a few bucks.

And while I believe in universal housing in the same way I believe in universal healthcare and a guaranteed minimum salary, I’m not holding my breath on any of them happening soon.

___

*I’ve been arguing for years that House runs his practice like an engineer. “Let’s go with it and see why it doesn’t work…”

Hogan

Testing to failure. it explains a lot.

NewishLawyer

That would be called being an associate at a law firm.

But I have noticed that younger docs seem fine and happy working at places like Kaiser or One Medical than starting their own practice.

MacK

A cousin studied theatre and did have a business course as part of it; a chef I know also received small business and cost planning courses in culinary school; and I have heard of art schools doing it. Interesting who does not get this education.

Hogan

It seems like a lingering sense of the learned professions as pursuits for gentlemen. Actually knowing the nuts and bolts of running a practice is too much like being in trade; shouldn’t I have people for that?

LeeEsq

I think this is pretty much it. Like I’ve noted before, a lot of the weirder aspects of legal practice in the United States originate from when being a barrister was an acceptable profession for English gentleman but being a solicitor, a work a day lawyer was not. The solicitors were supposed to handle the more grubby and business aspects of lawyering while the barristers got to do the fancy stuff.

Kathleen

I think training for most students being trained in specific professional disciplines is sorely lacking. A lawyer, doctor, psychologist, social worker, or educator may be proficient in “technical” skills required, but lack the training in applying those skills in an actual work environment. I’ve heard many horror stories about how employees have been treated in non profits because they have bosses or managers who don’t have a clue about managing, supervising, or leading people in a work environment. Also, it’s beneficial to provide students with at least a basic overview of office management, budgets, and organization skills.

Do law students get training in the procedures they need to follow for court cases? Is that included as part of their law courses? Or do they get that on the job?

Lamont Cranston

“Do law students get training in the procedures they need to follow for court cases? Is that included as part of their law courses? Or do they get that on the job?”

It’s all OJT. A fresh JD has no practical skills at all, and would malpractice nearly any case they attempted to handle by themselves.

BoredJD

“Getting crap filed 101” would be a hugely important class- screwing up a deadline because you forgot to file something is bordering on malpractice. It’s also something that the big firms where law professors tended to spend their brief practice experience usually leave to a separate office of non-lawyers specifically trained to understand court rules and filing requirements- I’m not sure the average non-clinical law professor would even know how to go about beginning to design such a curriculum. (Law professors were also usually law clerks but those are separate from the court clerks who deal with the filing stuff).

MDrew

I’m not sure the average non-clinical law professor would even know how to go about beginning to design such a curriculum.

I have only second-hand exposure here, but my impression is that this hits closer to the the true limiting problem in this area than anything else mentioned in this thread. Which is pretty frightening if you ask me.

LeeEsq

I did not get any practical experience at all during my legal education including the procedures needed to follow court cases. Even practical courses like civil procedure, evidence, and remedies were more theoretical than practical. I luckily ended up in a field of law that has relatively informal practices because both sides want to keep things moving as fast as possible. My boss was also willing to train me.

UserGoogol

One idea that comes to mind is that if law schools want to teach high-minded abstract theory without really caring all that much how useful it’ll be in professional practice, why aren’t PhDs in law more popular?

Have an cheaply run JD in law for people who want to get the skills to practice law, and also offer a PhD in law and fund it like a PhD. There’s got to be TA/RA-type work a law student could assist with in exchange for tuition.

(Of course, PhD programs have their own problems, but not as bad.)

NewishLawyer

My law school has a class called Accounting for Lawyers and that was about it.

Lee Rudolph

Ridiculous. There is no accounting for lawyers.

PaulB

N_B, I have several physician friends who’ve told me they came out of medical school and residency clueless about any business aspect of setting up a practice or joining an existing one. Opthamologists who derisively say that optometrist medical skills can be learned in two weeks have told me that a great deal of time is spent in optometry school learning about starting and managing your own business.

Colleen

I have a family friend who has a small practice. The economics of it are daunting. Luckily he is older so he went to law school before it meant crippling debt, but he still jokes he will be practicing until the day he dies. It seems like you can never get ahead in private practice. If you get a “big case” you lose your ability to catch the small bread and butter cases that keep your practice busy over the long term, but you also need the big infusion of cash to carry you over slow times like holidays and summers. I don’t know how he doesn’t punch judges that think nothing of continuances, delays and recesses for no reason that drag out cases for months. Unlike a big city firm, he often charges a set fee so dragging a case out makes his $/hour laughable. Like a Realtor, appearances are important. So the office has to look very nice and up to date. He always has to have great suits, ties, watches and shoes. Not only does it matter when attracting clients, but even judges treat “threadbare” lawyers worse than affluent looking ones. We keep hoping he can get appointed as a judge so someday he can get off that treadmill.

Lamont Cranston

About half of the small firm lawyers I know have a retirement plan that consists of working until they die.

jim, some guy in iowa

I suspect the majority of small business operators of any sort have pretty much the same plan. I certainly do

PhoenixRising

Yes, Jim, but I at least have the equity I’ve been able to build by buying rental real estate with the money I didn’t spend on my student loans from law school.

The fiscal irresponsibility of advising people who are going into a solo practice consulting for businesses that a JD is going to help them do that…the math doesn’t work. I genuinely feel sorry for the younger lawyers who we use for business lawyering. They know less than I do about how to resolve conflict, but they owe more than I can imagine for the plumbing (motion timelines, etc) that they know.

jim, some guy in iowa

oh, I didn’t intend to say I think there’s anything *okay* about that- especially for the younger professionals who are going to have an increasingly harder row to hoe

BoredJD

If he’s in most states, even getting on the list to be considered for a judgeship is going to take an immense investment of time and money.

Denverite

In Colorado, appointees have to be residents of the district in which they’re appointed. That means that in more populous districts (basically the whole Front Range minus maybe Pueblo) it’s essentially impossible unless you’re deeply involved in politics. If you’re willing to go out to the eastern plains or the sparsely populated mountain counties (especially in the NW or SW corners of the state), it’s much easier. But then you’ve got to live and work out there for the decade or however long before you get appointed.

Atrios

The “running a small business” thing is daunting for people in a variety of professions. People want to work for themselves understandably, but you can’t just do the thing you’re actually trained for (law, plumber, whatever). You have to administer a business, or earn enough money to hire someone (and find someone trustworthy) to do it for you. This is not impossible, of course, but if you just want to fix pipes and install water heaters it’s a pain in the ass.

The Dark Avenger

My grandfather started his own trucking business in the late 40s, and my grandma was his bookkeeper for said business.

sparks

A friend ran an auto-repair shop. He did his own books, and was audited so many times the IRS practically was doing his books for him.

BigHank53

The sad part is that most of it is stuff that could be covered in a single day. “Here are your fixed costs: rent, insurance, utilities. Divide by the number of hours you can bill per month. That’s how much you need to charge just to keep from losing money. If you want to eat, you’re going to have to charge more. A lot more.”

LeeEsq

I’m not even sure if it is possible to really teach people how to run a small business or set it up. There are so many things that need to be considered in general and even more for professional businesses that have many requirements besides those involved with running a business that must also be met.

COnrad

I agree it’s probably impossible to teach someone how to effectively run a small business from scratch, you can teach someone the basics of budgeting, breakeven point analysis, accounting, tax and employment obligations pretty effectively. And law schools aren’t even trying to do that.

ckc_not_kc

…you mean something like Mastering Business Administration? Sounds like something that should be useful (theoretically).

NewishLawyer

My GF has an MBA from a top school. She has no desire to start or run her own business as far as I can tell. I don’t even know if she wants to be C-suite. Many of her friends started their own companies, so I find it the difference on who wants to do this or not fascinating.

The same is true with tech types. Some are really into their own startups and others just want to code.

I’d be happy just being a lawyer at a firm who rises to Of Counsel. I might have to start my own firm because of what happened but I am still really resisting it.

Linkmeister

Rincker Law PLLC’s own brand would be enhanced if it ensured that the word “publicly” is spelled properly on its list of tips to make brands memorable.

Unless the misspelling is part of making its own brand memorable, of course.

At least they didn’t spell it “pubicly” as I saw on an application to the NYC Landmarks Commission not long ago.

MDrew

I noted this as well, and thought, “I hope I’m wrong the one who’s wrong here.” I’m never 100% sure which is right, or whether both might be.

I used to work for Practising Law Institute, which is indeed spelled with the s, which is at best an archaic spelling at least from a modern word-processing perspective. I’m always a little worried about it on my resume.

Brian Adamson

While publicly is certainly far more common, and publically is flagged by most modern spellcheck software as being incorrect, the Oxford English Dictionary still lists publically as an acceptable alternate spelling, and has references which support its guidance that cover a span of a few hundred years of written English.

This post on the Macmillan Dictionary blog offers a perspective on why ‘publically’ refuses to go away:

Just by way of understanding the numbers here: does “solo practice” mean only true solo practices? If a new JD starts a firm with just one other classmate, are those two lawyers not even in this number?

It would seem so, and it would make the number even more notable.

Paul Campos

If a new JD starts a firm with just one other classmate, are those two lawyers not even in this number?

Right, that would be a “law firm.”

Another thing that’s striking about these income numbers is that they include almost no new graduates. Over the past five years less than 1,000 graduates per year have listed themselves as solos nine months after graduation, so new and recent graduates make up a trivial percentage of the 350,000 or so lawyers who are running solo practices. In other words, these income numbers are for experienced lawyers.

MDrew

So, this can be a learning moment for me. Am I wrong to read condescension into that first sentence? I genuinely don’t know.

And are you right to draw that distinction? You start a law practice meant to make money with a partner; we know that is a law firm. You start a law practice meant to make money with no partner; that is not a law firm? No, I think, rather, that, too, is a law firm.

Hogan

75% of all practicing lawyers are in private practice, and half of these people are solo practitioners (the other half is made up of partners and associates in law firms of all sizes, along with lawyers who work for businesses and other non-government entities).

He stipulates the definition of “firm” that he’s using. You can quibble with the definition, although I can’t think why you would for purposes of this discussion, but it’s right there in the OP.

MDrew

Well, sorry I didn’t pick that up from those three words inside that parenthesis.

I quibble purely because 1) I think I got snipped at about it when 2) it wasn’t important to point out whether it was in the OP as I was just trying to amplify the basic point; 3) the stipulation was as obscurely placed within the post as your quote shows it to be, and 4) the phrase could have just as elegantly, by using the word “other” to modify “sizes,” reflected 5) what is the correct definition of the term.

Solo practices are law firms; if half of lawyers in private practice work in solo firms, then the other half work in firms of all other sizes.

And I’m not the one who got snippy about the terminology point.

Paul Campos

No condescension intended. The quotes are meant to indicate that a “law firm” of that sort would be an essentially fictional entity, as it wouldn’t have any clients and probably very little prospect of getting any.

RickScott

So what about a corporation with one lawyer that elects S-Corp status? “Law firm” or “solo”?

I am incorporated and have one employee. I think we elect s-corp status but I’d have to ask my accountant.

Does this data skew lower because most solos incorporate as they buy property and hire employees? I know things are fiercely competitive out there for solos, but it might not be quite as bad as this data suggests.

NewishLawyer

How about lawyers who maintain separate practices but split expenses for stuff like office space? A receptionist? Office supplies? I’ve seen that done.

CJColucci

What I think I’m seeing here is a request for some further information. Are lawyers who practice (or, in deference to PLI, “practise”) in tiny firms of 2-4 lawyers in the much the same boat economically as pure solos, or is their situation significantly different?

NewishLawyer

I think that really depends. Not all solos are doing poorly. I know solos who do quite well for themselves. I know small firms that have decent boutique businesses and do very well for themselves. There are also probably a lot of small firms that are constantly in panic mode.

I’ve known bigger firms that went through long rough patches before winning a very big case which put them in the black for a long time.

Tracy Lightcap

I hate to keep harping on this, but, Paul, stop with the truly awful graphs, please. Nobody should ever, under any circumstances, use a “3-D” line or bar graph. Look at the top of the first bar graph. Is the actual public law school tuition in 2012 around $22K or $24K? I challenge anyone to know which without an accompanying explanation about which line to read in the graph: the front one or the back one. “Oh, everyone will get that!” Would that it were so, but it isn’t; a lot of people will draw the wrong conclusion about the actual tuition cost. The line graphs are even worse.

And, btw, while it is true that the first hump in the legal salary distribution is lower and the high hump a lot narrower, this has been the case for some little time. It is true that sole practioners don’t earn princely sums of money. It is also true that they usually do better then the median family income in the US. That’s why you still have so many people who want to go to law school, despite the substantial headwinds. The status involved in professional work is a great draw as well. I tell them the real tale about debt from law school and they nod and go on anyhow; as one said to me, “I’ll be in debt no matter what I do. I might as well try to work in a field where I have a chance of paying it off.” Hard to answer that.

Paul Campos

Median family income in the US in 2012: $62,241. So about 25% higher than the mean for solos. (The median for solos is surely much lower).

Tracy Lightcap

You’re right; my bad. Still, whatever the median for sole practitioners is is more then a lot of people earn, especially from families in rural Georgia. Besides, there’s always the chance you’ll luck out. That’s why scare talk doesn’t usually signify down here.

sharculese

Hey Paul,

I remember you talking approvingly in the past about Georgia State as a law school that cares about keeping tuition down, and I was wondering if you’d be interested in talking to someone who’s been through that program, because I know someone who would be happy to talk to you.

Paul Campos

Yes I’d like to talk to him or her.

sharculese

What’s an e-mail address I can reach you at to set it up?

Unemployed_Northeastern

I imagine it would be on UC Boulder Law School’s website along with all the other professors’ emails.

– The Real Unemployed_Northeastern, not the impersonator on Wikipedia.

NewishLawyer

Here is what I’ve noticed as someone who graduated in 2011 and has done some work for solos.

1. I know or know of a lot of people who went solo because no one would hire them for all the known reasons. Most of these people hated it and are no longer solo.

2. A lot of them were surprisingly able to build enough experience to get hired by a firm as a mid-level associate. I am not sure that these people even had big books of business. One woman told me that the hardest thing was getting clients to pay. The time of solo to associate varied on the person. One person I know had a small solo practice, worked another job full or nearly full time. Said person then got a government position and then a law firm position about half a year after the government job.

3. I know three people who are doing solo stuff because they want to and/or somehow made it work.

4. You can still share a suite of offices with other lawyers and split expenses.

5. There seem to be a lot of solo plaintiff lawyers in the Bay Area.

6. I don’t think Tort Law has slashed and destroyed plaintiff’s work as much as your post suggests. What it has changed is added a lot of upfront costs though like mandatory mediation. Old-school plaintiff lawyers will tell you about not getting jobs but starting their own firm on doing volume work in auto crashes and other small personal injury cases. All the old-timers say these cases are largely gone. So there has been a change of economics.

7. Opening up your own firm is scary. I’ve approached other classmates about starting our own practice. All of these people were in similar job situations as me. Everyone always backed out and said “Uh I have no money.”

CSI

Most people probably who go to law school do so precisely so they can avoid things like having to open their own struggling small business.

NewishLawyer

I resemble that remark!

L2P

Plaintiffs work is much, much harder than it used to be. I never practiced in the “glory days,” but I am old enough to have worked with attorneys who did and there was no end of bitching. There’s whole practice areas that basically disappeared. Medical mal is barely a thing anymore, class actions are a shell of what they used to be. 17200 got gutted. I could go on.

It’s not that you can’t make a living, but the cases are harder to make, don’t pay nearly as much, and cost a lot more to litigate. I mean, there’s still people making horse-drawn wagons, but the market’s quite a bit smaller.

Crusty

I’d like to address the notion that more solos will be good for consumers.

Generally, from what I’ve observed, in several practice areas, the glut of lawyers and/or desperate solos struggling to find a few nickels to rub together, prices really don’t fall below a certain point. The glut of competition means that when a paying client shows up, i.e., a live one, the solo had better charge as much as he can because there’s no guarantee that another one will show up for a good long time. Sure, there will always be one guy undercutting everyone else, doing the same thing, e.g., taking a plea on a DWI, for peanuts, but hardly anyone at all is helped by the lawyer who looks at the already depressed market and says hey, this serious task that requires the attention of an experienced professional because some important pecuniary or liberty interest of yours is at stake- I can do it for less than Crazy Eddie will sell you a tv. It is akin to skipping the visit to the doctor’s office and just ordering your own prescription from a website.

Katya

Attorneys who charge less (or are paid less, as are attorneys who do a lot of court-appointed work) often have to handle more cases to make ends meet. Excessive workloads mean that things fall through the cracks and clients are prioritized, neither of which is good for consumers overall.

Also, there are economies of scale in the practice of law. A solo practitioner probably still needs at least one office administrator; two or three attorneys can share one administrator. An attorney who has to deal with things like the routine business of billing, paying bills, scheduling appointments, etc., is an attorney spending less time earning fees.

L2P

That’s a great point. I don’t know a lot of practicing lawyers who think that more attorneys will lead to lower prices because, as you point out, there’s no way to make a living that makes it worth putting up with the crap of being a lawyer below a certain point. Why not just be a *plug in any job* if you’re making $40k a year?

mistermeister

Hi Paul and all. I’m a prospective law student and avid reader. I was just wondering if you can explain an apparent discrepancy. If solos are making less than 50k mean (and presumably even less as a median), and 2 out of 5 lawyers are solo practitioners, then how do we get to a median pay of over 110k for all lawyers, according to the BLS? http://www.bls.gov/ooh/legal/mobile/lawyers.htm

Crusty

If you are both an avid reader and a prospective law student, you are missing something.

mistermeister

Crusty, if it makes you all feel better about your blogging contributions here, I am leaning against not attending, in large part from all the great, free information gleaned from the “scamblog” movement. I’ve already turned down some offers, from near top-20 schools with scholarships ~60-70% of tuition. I’ve got other larger offers from Tier 1 & Tier 2 schools, but nowhere with full tuition (let alone living expenses). Given the job market, the three years of opportunity cost, and the fact I won’t really learn much (of practical value) at law school, why take on that risk? I’m interested in non-profit advocacy (or civil service work) anyway. I’ve already got some relevant work experience and I can always get a masters more cheaply and with less time.

MacK

BLS data is reported by employers – by definition solos are self employed and don’t have employers to report their earnings. The data you cite comes from larger law firms, general counsels’ departments and government.

mistermeister

Makes sense, it’s more efficient for them to collect it that way, dealing with less people. I figured it was some kind of sampling bias.

MacK

It’s not a sampling bias – it is what is being reported – earning from employment – not self-employment profits.

All you need for median pay to be 110k is for the 49th percentile to be at 110k.

So suppose the first 25% top out at 20k. The 35% point is 25k and the 45% point is 27k. As lon as the 49% is 110k, you’re fine. (Actually, you really only need the median point itself to be there.)

So, 40% of all lawyers are solos and half of them (thus 20% of all lawyers) are <$35k (as paul suggest; note that more than solos can be <$35k), that leaves quite a few lawyers (80%) to make up the difference. Plenty of room even without as exaggerated differences that I used in the prior paragraph.

ETA: This is why median isn’t a panacea, even with standard deviation. You want more fine grain percentages or an actual drawn curve.

mistermeister

Thanks Bijan, I understand how median works and how that means it is theoretically plausible. Granted, I didn’t really think it through thoroughly, there is a 30 percentile point difference to get to that 50th percentile position, and that is a lot. Yet, it still seems like a large swing even given the bimodal salary distribution. I have to assume MacK’s answer of sampling bias explains it more.

burnspbesq

I’m pretty certain that my experience is unusual and not scalable, because I work in a very technically complex specialty area (international tax), but I could work as hard and make as much money as I choose to, because the world does not lack for small to mid-size businesses that need help and can’t or won’t contribute to the overhead of a multi-billion dollar global enterprise (Big Four/Baker/DLA/MWE). My hourly rate is half what it was when I left BigLaw several years ago, but I am no less good at what I do and have a network of relationships with local service providers in the countries where I need them.

I feel sorry for solos who practice in commoditized specialties. There lives must be a bitch.

Crusty

What I do isn’t as specialized as what you do, but I have found the I can do what the Big Four/Baker/DLA/MWE for half the price pitch to be a difficult one, as I find that businesses like to use those types of global enterprises to cover their rears, feel good about themselves, don’t quite believe that what I do is the same, can’t believe I do it just as good for half the price or simply don’t want a solo practitioner for quasi-legitimate reasons, e.g., if I’m hit by a bus, what happens to their matter?

But anyway, I’m finding that the pool of potential clients seems to be split by people who have near unlimited funds to pay for lawyers and people who have no money whatsoever to pay for lawyers.